Bonchopulmonary dysplasia (BPD), chronic lung disease following neonatal lung injury, affects a majority of extremely low birth weight (ELBW) babies (< 1000g birth weight), and is a leading cause of morbidity and mortality in this population. Oxygen toxicity and barotrauma have been postulated as etiologic factors; increasing evidence also implicates inflammation in its pathogenesis. Corticosteroids are essential for the resolution of inflammation, and have myriad other effects on ling development, structure and function. Both basal cortisol concentrations during the first week of life and cortisol secretion in response to ACTH stimulation at the end of the first week of life are sognificantly lower in babies who subsequently develop BPD than in those recove. ELBW babies have also been reported to show symptoms consistent with adrenal insufficiency early in life, responsive to hydrocortisone supple- mentation. Early, high dose steroid therapy in the first two weeks of life has been reported to decrease the incidence of BPD; however, these very large doses also produce unwanted side effects, and may not be necessary. This is a pilot study, designed to estimate the benefits and safety of supplementation with physiologicaldoses of hydrocortisone (HC) during the first twelve days of life to decrease the incidence of subsequent BPD. The results of this pilot study will be used to calculate an appropriate sample size for a future multi-center trial. The secondary hypothesis to be explored is that this therapy will improve physiologic stability during the treatment period. AForty intubated newborns between 500 and 999 grams birth weight will be enrolled before 48 hours of life. Patients are treated with HC or placebo for 12 days. Primary measures of efficacy are survival without oxygen dependence at 28 days of life and at 36 weeks postconception. Secondary clinical variables are are indicators of adrenal insufficiency. The relationship of clinical outcome to the adrenal axis will be assessed through analysis of blood samples obtained on days 1 and 6 for 17-OH progesterone, 11-desoxycortisol, dehydroepiandrosterone, and cortisol; and for ACTH on day 6. After completion of HC therapy, cortisol response to ACTH is tested. The relationship of these factors to inflammation will be assessed by analyzing tracheal lavage specimens for markers of lung inflammation (interleukins, 1B, 6 and 8, elastase and inflammatory cells) and measuring cell adhesion molecules (CD14, 18 & 62L) on peripheral blood neutrophils using flow cytometry. Evaluating acute and longterm clinical outcome measures in conjunction with laboratory measures of adrenal hormones and inflammation will allow a preliminary assessment of both the clinical efficacy of early cortisol replacement therapy and the relationship of one pathophysiologic mechanism, inflammation, to that efficacy.